How This Mutual Fund Is Lighting Up Retirement Accounts

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Nuveen Large Cap Growth Opportunities Fund's ( FIGWX ) recent surge since the elections and since the Federal Reserve's December rate hike has given retirement-account and other investors reason to cheer.

In the trailing three months going into Thursday, the $300 million fund's 10.45% gain topped 93% of its large-cap growth peers tracked by Morningstar Inc., all of which averaged an 8.66% advance. The broad market, measured by the S&P 500, gained 8.33%.

For the Nuveen fund, that's way better than the mere 34% of direct rivals it outpaced in the past 12 months with a not-so-shabby 24.20% return.

The difference between now and the earlier period? Within their overall investment approach, fund managers Harold Goldstein and David Chalupnik favored stocks likely to get an extra tailwind from the elections and from rising rates. Those had to be stocks that fit their basic approach, which is the pursuit of stocks they think will have faster earnings growth than the market expects.

They paid for that by cutting stable and defensive consumer staples stocks by 7% in the fourth quarter and consumer discretionary stocks by 6%, the fund's fourth-quarter commentary notes.

The managers pumped up their financials by 7%, mostly the day after the elections. They boosted technology by about 3% and energy by 2%.

They began positions in Signature Bank ( SBNY ), SVB Financial ( SIVB ), Raymond James ( RJF ) and TD Ameritrade ( AMTD ).

All of those newcomers have very strong Composite Ratings from IBD in the high 80s or 90s. The Composite Rating , which starts at 1 and runs to 99, combines IBD's five performance ratings. Stocks poised to move higher often have a Comp Rating of 95 or higher.

In addition to a sterling 96 Comp Rating, SVB Financial is the No. 3-ranked bank in IBD's superregional industry group, thanks to growth metrics like four years in a row of earnings per share (EPS) growth and a 39.7% annual pretax margin.

IBD'S TAKE:SVB Financial is ranked No. 3 in the No. 1-rated Banks-Super Regional group. See which superregional bank is No. 1, and how these financials stack up on easy-to-understand fundamental and technical data at IBD's Stock Checkup.

The bank is headquartered in Silicon Valley, a hotbed of innovation. Its nonbanking businesses include asset management, private wealth management, brokerage and investment services, funds management, and business valuation services.

Raymond James is No. 2 in IBD's Finance-Investment Bank-Bankers group. It is propelled by factors like its fourth-quarter 47% EPS growth and eight straight quarters of increasing ownership by mutual funds.

In tech, the fund opened a position in Broadcom (AVGO), a chipmaking company whose EPS growth has accelerated for three quarters. On IBD's Leaderboard, the company makes analog and digital semiconductor systems for wireless communications and broadband communications.

Goldstein and Chalupnik like the semiconductor space's economic sensitivity. And they like Broadcom's role among leaders of consolidation within its industry.

In energy, the fund added new positions in Concho Resources (CXO) and Parsley Energy (PE), and added to its stake in Pioneer Natural Resources (PXD).

"(We) added exposure to several growth-oriented exploration and production firms as a result of the generally improved outlook for oil pricing and supply," the managers wrote.

In health care, the fund's overall weight stayed basically unchanged in the immediate postelection period. But the fund made individual stock moves.

It started a stake in Incyte (INCY), which the managers call a fast-growing young biotech firm with an exciting pipeline of cancer-fighting treatments.

To pay for Incyte, the fund used proceeds from the sale of two drugmakers, Allergan (AGN) and Bristol-Myers Squibb (BMY), which it had owned a long time.

The managers think Allergan has grown so large that it can no longer grow much faster than its industry. They sold Bristol-Meyers because test results dimmed the outlook for a lung cancer therapy it was developing.

The managers summarized their approach this way: "The portfolio continues to be reasonably balanced from a sector standpoint as well as measured by other factors. The fund's largest overweight is in the area of companies with high growth potential that we believe can perform well somewhat independent of the economic cycle. We are always looking for exceptional growth companies that we believe have solid and/or improving fundamentals, a reasonable valuation and an approaching catalyst."


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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